Eu eyes quick US trade pact to avoid Trump car-duty threat

French President Emmanuel Macron checks out a car at the Paris Motor show on October 3. The EU is facing a possible threat of US automotive duties on EU-made cars and vehicle parts.
Image Credit: AP

Innsbruck, Austria: The European Union vowed to seek a quick and limited trade accord with the US in the hope of keeping at bay the threat of American tariffs on EU cars and auto parts.

The pledge at a gathering of commerce ministers from the EU in Innsbruck, Austria, on Friday showed that Europe is still trying to understand the trade-policy intentions of US. President Donald Trump’s administration and wary of being wrong-footed.

At stake is how to carry forward a deal in July between Trump and European Commission President Jean-Claude Juncker that put on hold possible US automotive duties based on the same national-security grounds the White House used to impose controversial levies on foreign steel and aluminium.

The two leaders agreed on July 25 in Washington to work toward the elimination of tariffs on industrial goods traded between the EU and US, setting up a working group that had its political kickoff in September. Both sides also held out the prospect of an eventual settlement to the dispute over the US metal levies, which prompted the bloc to retaliate with tit-for-tat duties on American goods.

“After the meeting of Trump and Juncker, there are clear signals of wanting to work together,” Economy Minister Margarete Schramboeck of Austria, current holder of the EU’s rotating presidency, told reporters on Friday in Innsbruck. “We in Europe need to stand united and strong.”

The current ceasefire in the trans-Atlantic trade battle risks coming to an abrupt end and sparking the kinds of escalating attacks featured in the US-China fight should Trump revive the threat of auto duties against Europe. The value of EU automotive exports to the US is about 10 times greater than that of the bloc’s steel and aluminium exports combined, meaning European retaliatory levies would target a bigger amount of American exports to Europe.

“The working group needs to come to closure,” Dutch Minister for Foreign Trade Sigrid Kaag said in Innsbruck. “A good result,” she said, would be “that trade restrictions are off the table, the knife is off the table, that we come back to a level playing field.”

France’s junior foreign-affairs minister, Jean-Baptiste LeMoyne, said the European goal is a “restricted” market-opening accord with the US covering “certain industrial sectors” and regulatory cooperation. He said Europe would reject any US effort to include agriculture in the scope of the trans-Atlantic talks.

“The red line for France and the European Union are farm products,” LeMoyne told reporters.

‘Time is Running Out’

European officials have signalled confusion over whether the US wants cars to be covered in any trans-Atlantic deal lowering industrial tariffs, while stressing that the EU would be prepared to cut or scrap its 10 per cent duty on foreign autos — higher than the comparable US levy of 2.5 per cent. A joint US-EU statement from July 25 refers to a goal of zero tariffs on “non-auto industrial goods.”

In the wake of that agreement, a senior EU trade official said the language probably signalled a desire by the Trump administration to maintain a prohibitive American tariff of 25 per cent on foreign pickup trucks. One in six passenger cars sold in the US is a pickup, with no imports into the country, according to a paper from June by the Brussels-based commission, the EU’s executive arm and trade negotiator.

Asked on Friday in Innsbruck whether the EU had any more clarity on this question, European Trade Commissioner Cecilia Malmstrom said: “not really.”

Malmstrom also said the that, while any additional US tariff on European cars “is not around the corner” because a Trump administration investigation into the national-security aspects of automotive imports continues, “it could absolutely happen.”

She repeated that, should Trump revive and act on his threat, the EU would respond as it did to the US metal duties through retaliation, that the number of targeted American products would be “much” bigger and that the “more extensive” list is “in preparation.”

German Economy Minister Peter Altmaier signalled a wish for cars to be covered in any trans-Atlantic accord to lower trade barriers by saying such a deal should include as many industrial goods as possible.

“We want to push forward with the negotiations with the US on a joint solution that prevents a trade war,” he said. “’Time is running out.”

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